A Glen Carbon senior living facility with ties to the Lutheran Church is not exempt from paying property tax.
The Fifth District Appellate Court ruled last week that charitable and religious use applications made by Meridian Village from 2003 through 2006 were not “clearly” erroneously denied by the Illinois Department of Revenue (IDOR) in 2009.
“While the appellants and the Lutheran Church remain free to characterize their activities on the subject property as of a religious nature, neither the Department nor this court is bound by that characterization,” wrote Justice Thomas Welch.
The appellate court took up Meridian Village’s appeal of Madison County Circuit Judge Barbara Crowder’s Jan. 24, 2013 order affirming the Department’s denial. Its review considered the decision of the Department rather than the circuit court’s.
Meridian Village's exemption applications were initially opposed by Edwardsville Community Unit School District No. 7, which relies on property tax funding, and the Village of Glen Carbon.
In the opinion published March 28, the court cited Three Angels Broadcasting Network, Inc. v. Department of Revenue, a decision out of the Third District. Three Angels holds that where the resolution of a case requires determining the legal effect of a given set of facts, the agency's determination should be affirmed unless clearly erroneous.
Justices were not persuaded by Meridian Village’s religious grounds argument.
The court found that the primary use of the property is housing, not a place of worship.
“Other than caring for the elderly in a faith-inspired manner, there was little evidence of actual religious activity on the property,” Welch wrote.
“The Department's conclusion that the appellants' property is not used as a stated place for public worship, Sunday schools, or religious instruction, or anything of that nature is not clearly erroneous.”
Justices also rejected Meridian Village’s charitable use argument.
They determined that the use of the property does not satisfy even a majority of six constitutional criteria necessary for exemption on charitable use grounds, which are:
(1) The benefits derived are for an indefinite number of persons for their general welfare or in some way reducing the burdens on government; (2) The organization has no capital stock or shareholders and does not profit from the enterprise; (3) Funds are derived mainly from private and public charity, and the funds are held in trust for the objects and purposes expressed in the organization's charter; (4) Charity is dispensed to all who need and apply for it; (5) No obstacles are placed in the way of those seeking the benefits; and (6) The exclusive, i.e., primary, use of the property is for charitable purposes.
Among other findings, the court held that Meridian Village failed to establish that its funds are derived mainly from private and public charity.
“To the contrary, the primary source of the appellants' income is from fees paid for services rendered,” Welch wrote. “The Department rejected the appellants' argument that their funds came largely as donations from Lutheran Senior Services, which derives its funds mainly from private and public charity. The appellants' audited financial statements indicate that these funds received from Lutheran Senior Services were loans and not donations.
"Furthermore, Lutheran Senior Services is a separate entity from the appellants, and the appellants cannot acquire charitable status through the acts of a separate entity. ”
The court also stated that IDOR found that Meridian Village places obstacles in the way of people seeking charity from it.
“The rental fees it charges are substantial and the evidence did not establish that the appellants charge less than similar for-profit entities operating in the area,” Welch wrote. “The appellants require large security deposits from all of their residents and any fees that are not timely paid accrue a finance charge of 10% per annum. Neither the late fee nor the security deposit has ever been waived for any resident. Renters are also required to maintain renters insurance including Lutheran Senior Services as an additional insured.”
Justices Richard Goldenhersh and Judy Cates concurred.
Edward T. McCarthy of McCarthy & Allen in Edwardsville represented Meridian Village.
Lisa Madigan and others represented the State.
Ellen M. Edmonds and Jack H. Humes, Jr. of Edwardsville represented the school district.
Terry Bruckert of O'Fallon represented the Village.